HTC taking steps to reduce smartphone production?

HTC could be planning to shut down major smartphone lines and begin outsourcing parts of its production to third parties, a recent report from Reuters indicates.

In an unofficial visit to the smartphone company’s factory near Taoyun, Taiwan, one of the reporters from the news publication saw no major signs of activity, but instead found a series of shuttered loading docks and an unpromising looking note that reads: “Lobby is temporarily closed for use. Thank you for your cooperation.”

Two of Reuters’ trusted inside sources suggest that the closed lobby is due to the company’s plans to lower its entire production output and to merge its existing Taoyun production lines into one. The decision is expected to reduce potential capacity by approximately 1 million handsets per month (out of a possible total of 2.5 million per month at the region), and t0 help stop some of the financial bleeding in HTC’s pocket.

The same sources claimed, also, that HTC has plans to begin selling some of its “out-of-use” plants in China and in Taiwan, and that it would consider outsourcing production to manufacturers such as FIH Mobile International, Compal Communications, and Wistron.

HTC remained on the defensive end when asked to elaborate on the above speculation by CNET and Reuters.

“HTC is not shutting down nor does it have plans to sell any of its factory asset,” the company representative said. “HTC has a very strong balance sheet and will provide the latest financials in our upcoming earnings call to investors and the broader community.”

Regarding what the Reuters reporter saw at Taoyun, the company responded:

“Whether we are operating those facilities depends on market demand and our own expectations. When you have less demand you work with less facilities to optimize your costs. When you have demand, or bigger growth, you definitely have to activate all these facilities.”